2001 Quest Software, Inc. Initial Public Offering Complaint

According to a Press Release dated November 29, 2001, the complaint alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On or about August 13, 1999, Quest commenced an initial public offering of 4,400,000 of its shares of common stock at an offering price of $14 per share (the Quest IPO). In connection therewith, Quest filed a registration statement, which incorporated a prospectus (the Prospectus), with the SEC. The complaint further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the Underwriters had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the Underwriters allocated to those investors material portions of the restricted number of Quest shares issued in connection with the Quest IPO; and (ii) the Underwriters had entered into agreements with customers whereby the Underwriters agreed to allocate Quest shares to those customers in the Quest IPO in exchange for which the customers agreed to purchase additional Quest shares in the aftermarket at pre-determined prices.

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